In Insurance News Net’s “The New Age Of Annuity Sales: Connecting With A Younger Demographic,” Rich Lane says that younger people are showing increasing interest in annuity products. Annuities used to be thought of as an investment strategy that was only for retirees. But new and changing products paired with a need to create your own retirement plan has brought annuities to the attention of younger people trying to create their own retirement investment strategy.
Retired Baby Boomers or those nearing retirement are certainly still the main group of people buying fixed annuities. That isn’t going to change anytime soon. But those who sell annuities should also turn some of their focus towards younger investors. The average age of someone purchasing their first nonqualified annuity is 51, according to a survey done by Gallup and The Committee of Annuity Insurers. Forty percent of those first time annuity buyers were actually younger than 50. LIMRA recently found that half of the people buying all annuity products are younger than age 60. These findings might contradict what many people assume to be true about the age of people buying annuity products. In addition to a slight shift in age, both the gender and marital status of people buying annuities has changed some. Just over half (51%) of those who own annuity products are female. And even though the majority of annuity owners (58%) are married, that number has decreased over time. Many women who find themselves single in their adult years whether they are divorced, widowed or never married, are searching for a way to create a strong retirement plan.
Younger investors are worried about retirement for many reasons. Some watched their parents or grandparents suffer through poor financial decisions that negatively effected their retirement. Others have gone through bouts of unemployment or hear the negative stories related to Social Security’s future. Many people in their middle age years like the benefits of fixed annuities. Fixed annuities are good for people who are conservative with their finances but still want to see a return on their investments. They are right for those with low risk tolerance who are trying to find a predictable source of future income. Fixed annuities work in most retirement plans, regardless of the age of the purchaser. For those younger investors looking for some higher potential gains, they can look into variable annuity or indexed annuity products as well. As younger investors look for more annuity products, it’s important to know what makes them different from the older investors and find the right products for their retirement plan.
Written by Rachel Summit